Tuesday, October 27, 2009

DIE

The New York Times Company reported a profit of $39.1m for its second quarter, beating Wall Street estimates forecasting a loss.
Three months ago it reported a loss of $74.5m for its first quarter.
The net income was 27 cents a share, compared with 15 cents a year earlier. Excluding special items like one-time charges and the tax adjustment, net income in the most recent quarter was 8 cents a share; analysts had forecast, on a comparable basis, a 4-cent loss.
However, this does not signal a turnaround in the newspaper sector. Profitability was achieved by severe cost cutting measures and a favorable tax adjustment.
The company trimmed operating costs 20 percent from a year earlier, or by $140.5 million; $29 million of that reduction came from the closure early this year of City and Suburban, a money-losing newspaper and magazine distribution subsidiary.
“For the full year we expect to save $450 million,” (Janet) Robinson (CEO) said. “That amounts to 16 percent of our 2008 cost base.”
Ad revenue plunged by nearly 32 per cent, the steepest decline since the Depression. Revenue from online operations dropped 14.3 per cent to $78.2 million.
Foremski's Take:
Clearly, the New York Times Company cannot continue to cut costs in order to make money. It's not a sustainable business strategy. And with online revenues falling it will be forced to come up with a way of charging its online readers.
Ms Robinson told analysts that the company is "undertaking quantitative and qualitative research as to how many of our readers would be willing to pay for online content, and how much they would pay. At this time, our work is centered on a metered model and a Times membership model with special offerings."
This is not a new strategy. The New York Times had to abandon an earlier attempt to charge for content.

Adknowledge Buys Smart Rewards: Will Virtual Cash Reinvent Online Ads?
Adknowledge, the largest online advertising network, today acquired Super Rewards, a fast growing startup that uses virtual cash to engage people with advertisers. The value of the deal was not disclosed.
"I'm very excited about the promise of virtual cash," Brett Brewer, president of Adknowledge, told SVW. " We wanted to acquire the leader in this space because we think that growth is going to be very fast. And we can scale the Super Rewards technology across our entire business. We also have offices in many countries and can bring in country specific advertisers."
Mr Brewer said that Adknowledge annual revenues are about $250 million. But display advertising is becoming less effective. "We think virtual cash is going to be very big. Instead of bombarding consumers with more ads, Super Rewards allows people to engage with advertisers, it gives people a choice."
Virtual cash is a big business in the online gaming world and it is now also being used in social networking sites.
Super Rewards pays people in virtual currencies of their choice in return for specific tasks such as if they sign up for a Netflix account or apply for an insurance quote.
Super Rewards buys the virtual currencies and in turn is paid by companies as part of regular affiliate sales commision. It makes its money on the difference between the money it earns from the affiliate sales and the cost of the virtual cash.

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